12-12-2004, 01:33 AM
Concillian,Dec 11 2004, 01:59 PM Wrote:Oddly enough, paying down your mortgage (at least in the US where we get a tax break on interest from a primary residence) is not always a wise financial decision given the low rates on home loans and the tax break on interest.[right][snapback]62542[/snapback][/right]Which is why I find all these people here that are recommending property to a guy in an unknown jurisdiction rather disturbing. In some places (particularly in Australasia presently) houses are so overpriced based on short term factors such as high immmigration, 'low' mortgage rates, 'low' unemployment (which are all tailing off) etc. that purchasing a house is nearly equivalent to financial suicide. Consider my situation for example. Mortgage would be 7.5%P.A., My rent is $7,500 P.A., an equivalent house would cost $2-300,000. (That's right, my Landlords are getting a 2-4% return on their investment in an environment where govt bonds are paying 6.5% let alone any other types of more lucrative investment. That, and once the factors putting upward pressure on house prices disappear, their house will be worth less than it is now...). In NZ in particular there is this weird effect where people have been buying up houses, but with net emigration starting, and an ageing population, there is not going to be the demand for them ...
(OK, so I have only shown the negative side, but that's my point. Housing may end up as being a good part of his(?) investment portfolio, but Abramelin needs some advice that suits the specific needs of his situation).